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There is no wide-reaching entitlement funding crisis, no deep-rooted connection between runaway debts and the broad suite of pension and social welfare programs that usually get called entitlements. The problem is linked to entitlements, but it’s much narrower: If the U.S. budget collapses after hemorrhaging too much red ink, the main culprit will be rising health care costs. Aside from health care, entitlement spending actually looks relatively manageable. Social Security will get a little more expensive over the next 30 years; welfare and anti-poverty programs will get a little cheaper. But costs for programs like Medicare and Medicaid are expected to climb from the merely unaffordable to truly catastrophic. Part of that has to do with our aging population, but age isn’t the biggest issue. In a hypothetical world where the population of seniors citizens didn’t increase, entitlement-related health spending would still soar to unprecedented heights — thanks to the relentlessly accelerating cost of medical treatments for people of all ages.1 What’s needed, then, is something far more focused than entitlement reform: an aggressive effort to slow the growth of per-person health care costs. Or — if that’s not possible — some way to ensure that the economy grows at least as fast as the cost of health care does. Diagnosing the debt: It’s not about demographics America’s long-term budget problem is very real. Already, the federal government has a pile of publicly held debts amounting to around $15 trillion, or about 75 percent of the country’s entire gross domestic product. That’s the highest level since the 1940s, yet the debt burden is expected to double by 2047 and reach 150 percent of the GDP, according to the Congressional Budget Office.2 It makes sense to list entitlement spending among the culprits for the growing national debt, given that these programs have grown from costing less than 10 percent of the GDP in 2000 to a projected 18 percent in 2047. Part of this is simple demographics: As America ages, more of us become eligible for Social Security and Medicare, thus driving up expenses.3 But there’s a crack in this demographic explanation: It only makes sense for the next 10 to 15 years. That’s the period of rapid transition when graying baby boomers will boost the population of seniors from around 50 million to more than 70 million. A change like that should indeed produce a surge in entitlement spending as those millions submit their enrollment forms. By 2030, however, this wave will start to ebb, leaving the elderly share of the population at a roughly stable 20 to 21 percent all the way through 2060, based on the size of the population following the boomers and slower-moving forces like lengthening lifespans. But think what this should mean for entitlement spending. As the population of seniors levels out in those later years, costs should naturally stabilize — at least, if demographics were really the driving factor. This is exactly what you see for Social Security. The CBO expects total Social Security spending to leap up over the next decade but then settle at just over 6 percent of the GDP, at which point it will cease to be a major contributor to rising entitlement spending or growing debts. Social Security is thus a minor player in our long-term budget drama; if you cut the program to the bone, shrinking future payouts so that they won’t add a penny to the deficit, the federal debt would still reach 111 percent of the GDP in 2047.4 Likewise, cuts to welfare and poverty-related entitlements like food stamps and unemployment insurance are unlikely to improve the debt forecast. In fact, spending on these entitlements has been dropping since the high-need years around the Great Recession and is expected to shrink further in the decades ahead — partly because payouts aren’t adjusted to keep up with economic growth, and partly because the birth rate has been falling and several programs are geared to families with children.5 But the scale of the problem is totally different when you turn to health care. Spending on entitlement-related health programs — including Medicare, Medicaid and subsidies required by the Affordable Care Act — will never shrink or stabilize, according to projections. The CBO predicts these costs will grow over 65 percent between now and 2047 — and then go right on growing after that, heedless of the fact that the percentage of the population that’s over 65 should no longer be increasing. <<<Chart Omitted>>> Why is health care eating the budget? Per-person costs Demographics aren’t responsible for the projected explosion in health care costs. More important than the growing number of elderly Americans is the growing cost per patient — the rising expense of treating each individual The CBO found that the lion’s share — 60 percent — of the projected increase in health spending comes from costs that would continue to increase even if our population weren’t getting older. The reasons for this are many, including the rising cost of prescription drugs and the fact that hospital mergers have reduced competition. But since 2000, per capita health costs in the U.S. have, on average, grown faster than the GDP. And while these costs rose more slowly after the Great Recession and the implementation of the Affordable Care Act, analysis from the Centers for Medicare and Medicaid Services suggests this slower growth rate won’t last. Which is bad news for these programs, because if the problem were demographic, it’d be easier to solve. By mixing the kind of program cuts Republicans generally support with targeted tax increases favored by some Democrats, you could meet the short-term challenge posed by retiring baby boomers and raise enough money to cover the larger — but stabilizing — population of eligible seniors. But with ever-rising costs, there is no stable future to prepare for. To keep these programs funded, you’d need a wholly different approach — indeed a whole new perspective on mounting federal debt and the role of entitlements. The future is a race between rising health care costs and economic growth, a race that the economy is losing. Each time health costs outpace the GDP, it creates what the CBO calls “excess cost growth,” which feeds the federal debt. If the government could close this gap, the long-term budget outlook would be a lot rosier.

Managing Director, Health Sciences & Wellness, Ernst & Young LLP, Eduardo Schur EY US Health Sciences & Wellness Commercial Strategy & R&D Lead, and Shashank Rao Senior Director, EY-Parthenon, Ernst & Young LLP “Drive commercial success by effectively navigating loss of exclusivity” JAY-HOCH

In brief

Wide-ranging economic data illustrates a downshift in US growth over the first half of the year tied to both the Federal Reserve’s higher-for-longer borrowing costs policy and sting of lingering inflation. The government marked down personal spending — the main engine of the economy — by half a percentage point to an in the first quarter. Separate releases on Thursday showed declines in orders and shipments of certain business equipment, the widest trade deficit in two years, weakness in the job market and a slide in homebuying. “The economy is operating in low gear in the first half of 2024 after above-trend growth in the second half of 2023,” Bill Adams, chief economist at Comerica Bank, said in a note. “Real GDP was cool in the first quarter, and the second quarter has seen continued softness in retail sales and housing activity.” The Atlanta Fed’s now pegs second-quarter growth at 2.7%, a downward adjustment from the 3% penciled in before Thursday’s data. The data highlight how Fed policy that’s kept interest rates at a two-decade high is tempering demand by making borrowing more expensive for everything from consumer goods to home purchases to business equipment. Officials are hoping the moderation in economic activity will put a further damper on inflation. Another report on Thursday illustrated the impact of mortgage rates around 7% on the housing market. The National Association of Realtors index of contract signings for previously owned homes slumped to the lowest level in records back to 2001. While monthly figures on Friday are projected to show a moderate rebound in May personal spending, signs of financial strain suggest cooler growth in coming months. After-tax personal income, adjusted for inflation, rose just 1.5% in the first quarter compared with a year earlier — the smallest annual advance since 2022. Moreover, labor demand — the main source of the income growth that fuels spending — is moderating. Continuing jobless claims, a proxy for the number of people receiving unemployment benefits, climbed to the highest level since 2021. That suggests it’s taking longer for out-of-work Americans to find another job. Businesses are also feeling the pinch of elevated borrowing costs. The value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, matched the biggest drop this year, Commerce Department figures showed. Core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product report, decreased 0.5%, the most in three months. Domestic producers also face the challenge of a stronger US dollar that risks depressing export demand. The US currency has climbed this year on expectations the Fed will keep interest rates higher for longer. The government’s advance economic indicators report showed the US merchandise trade gap swelled to $100.6 billion in May — the widest in two years — as exports dropped. At the same time, the report also showed increases in at wholesalers and retailers which will help blunt the impact on second-quarter GDP from the wider trade deficit.

NEW YORK, June 3 (Reuters) - The dollar fell to a three-week low on Monday after data showed the U.S. economy is gradually slowing down with weaker-than-expected readings on manufacturing and construction spending, suggesting that the Federal Reserve is on track to start cutting interest rates later this year. The dollar index, a measure of the U.S. currency's value against six major currencies, fell 0.4% to 104.14 . The index earlier dropped to 104.13, the lowest since mid-May. The greenback also slid a two-week trough against the yen following the data and was last down 0.7% at 156.22 . The euro gained 0.5% versus the dollar to $1.0897 , after earlier rising to a three-week high of $1.0898. Monday's data showed the U.S. Institute for Supply Management's (ISM) purchasing managers index (PMI) for manufacturing in May, from 49.2 in April, sliding as well from an 18-month high of 50.3 seen in March. In a research note, BMO pointed out that the U.S. manufacturing sector shrank in 18 of the last 19 months. Monday's ISM decline followed weakness in the Chicago PMI, Dallas Fed, Philadelphia Fed, and the Empire State manufacturing indexes. U.S. construction spending also for a second consecutive month in April, decreasing by 0.1% after a 0.2% decline in March, amid falls in non-residential activity. "Investors and markets are starting to believe that the U.S. exceptionalism theme is starting to wane," said Boris Kovacevic, global macro strategist at global payments company Convera in Vienna, Austria, referring to the world's largest economy's outperformance versus the rest of the world. "It's not completely over but...but markets are now questioning how long the U.S. exceptionalism theme has to go," he added. After the ISM and construction spending data, fed funds futures increased the chances of a rate cut in September to around 59.1%, according to LSEG's rate probability app, compared with around 55% late Friday. It was slightly below 50% earlier last week. The U.S. dollar posted its first monthly decline of the year in May, weighed down by shifting expectations on when the U.S. central bank will cut rates and by how much. The futures market is fully pricing in one rate cut of 25 basis points (bps) this year. In the euro zone, however, the European Central Bank is holding a meeting on Thursday and is seen as to cut rates. The comments from ECB officials will be in focus for traders along with economic projections as they assess whether the central bank will provide further cuts after Thursday in the wake of data showing a rise in in May. Markets are pricing in 57 bps of ECB cuts this year. In other currencies, sterling rose 0.4% against the dollar to $1.2799, boosted by the dollar's fall following the U.S. manufacturing data. The pound pared gains a little after Nigel Farage, who helped lead Britain's departure from the European Union, said he in next month's election and will lead the right-wing Reform Party. This is widely seen as a major blow to Prime Minister Rishi Sunak. In Mexico, the peso on Monday after the ruling party declared Claudia of the presidential election by a "large margin" after polls closed on Sunday. "The peso is underperforming amid seemingly growing concerns amongst investors that by securing supermajority in the lower house the governing coalition could be tempted to implement non-market-friendly policies," said Piotr Matys, senior FX analyst, at In Touch Capital Markets. The U.S. dollar was last up 4.1% against the Mexican unit at 17.704 pesos , after earlier hitting its highest since around mid-April.

Jomo Kwame Sundaram and Vladimir Popov, "Economic Crisis Can Trigger World War," Inter Press Service, 2-12-2019, http://www.ipsnews.net/2019/02/economic-crisis-can-trigger-world-war/

KUALA LUMPUR and BERLIN, Feb 12 2019 (IPS) - Economic recovery efforts since the 2008-2009 global financial crisis have mainly depended on unconventional monetary policies. As fears rise of yet another international financial crisis, there are growing concerns about the increased possibility of large-scale military conflict.

The innovative and critical nature of the U.S. biopharmaceutical industry with its significant societal and economic value has long been a key driver of the nation’s economic growth and contributor to state and regional economies. As this study documents, every U.S. state, the District of Columbia, and Puerto Rico has some level of industry employment leading to regional economic activity. The biopharmaceutical industry is a major driver of innovation and economic growth both within the U.S. and globally. The industry’s growth and resilience lead to jobs for significant numbers of highly skilled, highly productive, and highly paid workers across the country. Sustaining this important driver of the U.S. economy is a set of robust and long-standing pro-innovation policies that include strong intellectual property protections, a well-functioning and evidence-based regulatory system, support for research and development, and other policies that recognize both the societal and economic impacts of medical innovation. The Pharmaceutical Research and Manufacturers of America (PhRMA) engaged TEConomy Partners, LLC, to develop an independent estimate of the economic contributions of the U.S. biopharmaceutical industry and its closely integrated supply chain in 2022. The analysis includes estimates for the United States, each of the 50 states, the District of Columbia, and Puerto Rico. A full methodology is included in Appendix A. Key findings from this examination of the broad biopharmaceutical value-chain include the following: • The U.S. biopharmaceutical industry directly employed more than one million workers in 2022, and with its substantial employment multiplier of 4.69, the industry supports more than 3.8 million additional U.S. jobs for a total employment impact of more than 4.9 million jobs supported across the U.S. economy. • The industry has been able to weather economic downturns, demonstrated by solid 30.8% growth since 2015, providing important stability to both the production of life saving medicines and to the U.S. and regional economies in which it operates. • With average annual wages and benefits in 2022 of more than $157,000 per worker —over $60,000 more than the average U.S. manufacturing job, and more than twice the U.S. average across all industries—biopharmaceutical industry jobs are both high-wage and high-quality. • The research and productive nature of the U.S. biopharmaceutical industry generates a productivity level of more than $402,000 per employee in 2022—more than twice that of the U.S. average manufacturing worker and more than three times the average U.S. worker. Executive Summary 1 • A notable characteristic of the U.S. biopharmaceutical industry’s workforce is the reliance on highly skilled, occupationally diverse workforce as the industry employs more than 100,000 workers in each of four occupational categories: Management (163,085), Life, Physical, and Social Science (146,274), Production (140,707), and Business and Financial Operations (102,786). • The U.S. biopharmaceutical industry exceeded $800 billion in direct output in 2022, and with the ripple effect of this production throughout the U.S. economy, supported an additional $850 billion in output through its suppliers and other sectors of the economy, for a total of more than $1.65 trillion. This combined, total output impact represents 3.6 percent of all U.S. output. • Through its research, production, and overall operations, the U.S. biopharmaceutical industry directly accounts for 1.6 percent of U.S. GDP (i.e., its “value added”). Including the economic activity driven in other sectors of the economy the industry generates and supports more than $880 billion in value added within the economy, or 3.4 percent of U.S. GDP. Biopharmaceutical Industry’s Contributions to the U.S. Economy 0.5% 1.1% 1.6% 1.7% 2.4% 2.8% 3.4% 3.6% Employment Labor Income Value Added Output Biopharmaceutical Industry Direct Share of U.S. Total Total Industry Supported Share of U.S. Total Source: TEConomy data, calculations and analysis; IMPLAN U.S. model. 2 Introduction: The Innovative Biopharmaceutical Industry Among U.S. industries, the biopharmaceutical industry is defined by and stands out as a leader in research and innovation. Nowhere was this more apparent than in the last few years as the nation’s biopharmaceutical industry members worked to develop critical vaccines, therapies, and diagnostic capabilities related to the COVID-19 pandemic. However, these capabilities did not develop overnight in response to pandemics but were the reflection of a unique industry driven by innovation that has been investing in this ability for many years. With its high levels of investment in R&D, multi-sectoral structure, significant employment, and broad occupational requirements, the U.S. biopharmaceutical industry brings significant employment and economic impacts to every state in the nation. To measure the size and extent of the U.S. biopharmaceutical industry, PhRMA engaged TEConomy Partners, LLC, to develop an independent estimate of the size of the U.S. biopharmaceutical industry and its total economic impacts on the U.S. and individual state economies (including the District of Columbia and Puerto Rico).

Additionally, the American Hospital Association (AHA) notes that “advances in medicine contribute to national economic growth by helping Americans recover more quickly from injury and illness, avoid lost or ineffective work time due to flare‐ups of chronic conditions, and live longer with higher quality of life.” Without effective medicines and treatments for illnesses, injuries, pain and chronic conditions, the productivity of the U.S. economy would clearly be greatly impaired. Biopharmaceuticals are a key contributor to a more productive and healthy America and U.S. economy. Beyond direct employment in pharmaceutical companies, the biopharmaceutical sector is the foundation upon which one of the United States’ most dynamic innovation and business ecosystems is built. A large part of the modern biomedical economy is built upon a robust foundation of biopharmaceutical companies that perform and support advanced biomedical and technological R&D, and act as the funnel and distribution engine for getting life‐saving and quality‐of‐life‐sustaining therapeutics to the marketplace. Providing R&D impetus and funding, capital resources, technology licensing opportunities, and a sophisticated market access and distribution system, the biopharmaceutical sector is of central importance to the much broader biomedical and life sciences economy. Fueled by private investment capital, venture capital investments, and public/private collaborations, and enabled by the U.S. open market system, the nation has been able to advance biomedical innovation, which in turn has led to new start‐up companies, business growth and exports across the world. Conclusion Despite the tremendous success in the biopharmaceutical industry, emerging infectious diseases continue to present new challenges and a substantial volume of long‐standing diseases such as cancer, diabetes, neurodegenerative diseases, psychiatric diseases, immunological diseases, etc. continue to demand novel treatments and improved therapeutics. There are millions of people suffering from diseases and disorders for which a therapy has yet to be found. The need for ongoing biopharmaceutical research and development is simply enormous. The only way the U.S. economy can stay ahead of international competition is by using advanced R&D and innovation to drive the growth of high value‐added industries. By leveraging investment in federal lab, university and industry R&D, our nation is able to produce high‐value, typically technologically advanced products that the rest of the world values highly. In recent decades, life sciences have come to the fore as a leading driver of U.S. technological innovation and competitive advantage, and the biopharmaceutical sector is a key foundation of the life sciences innovation ecosystem. The United States’ pharmaceutical industry produces products that save, sustain and improve lives, and the sector has a large and significant economic impact, affecting many other key areas of the U.S. economy. Gains or losses in biopharmaceutical sector revenues will be reflected in gains and losses across a broad range of additionally important U.S. economic sectors that have robust supply chain relationships with the biopharmaceutical sector.

A few months before leaving office President Barack Obama wrote about the challenges that his successor would have to tackle. Recent innovations, he claimed, “have not yet substantially boosted measured productivity growth.” In fact, since 2004, productivity growth slowed across nearly all advanced economies. Productivity being the most important determinant of economic growth, Obama concluded, “Without a faster-growing economy, we will not be able to generate the wage gains people want, regardless of how we divide up the pie.” President Obama was right: Productivity is the key to economic growth. In fact, over 60 percent of cross-country differences in income can be explained by productivity. There are several explanations addressing the productivity slowdown that go from mismeasurement to the “drying out” of productivity-enhancing innovations, but consensus hasn’t been reached. What is clear is that in order to understand productivity it is important to look at the behavior of the smallest possible economic unit driving changes in aggregate productivity: the firm (individual businesses and corporations). In my most recent working paper, I look at millions of firms concentrated in more than 40 countries trying to answer a simple question: Is there convergence? Convergence, originally, is the name given by economists to the process through which poor countries grow at faster rates than rich countries, generating catching-up (a process for which there is little to no evidence of actually occurring without certain conditions). So, taking this question to the firm level and with a focus on productivity, I ask: Are the very low-productivity firms improving their productivity at a faster rate than the high-productivity firms? Intuition would say the answer is yes. Why? Imagine the life of a newly established small firm producing footballs. In its beginning, it is likely that the firm is very “unproductive,” with each football produced requiring more worker-hours than an already established, large football firm. But the small firm can improve relatively quickly by simply copying some best practices from the larger firms, by, for example, hiring one manager that used to work at a larger firm or by buying a football making machine that was invented and developed by others. Therefore, these small firms can be expected to improve their productivity quite fast. However, for the already highly productive firms to improve their productivity requires more effort than simply copying best practices. Instead, it requires innovating, which in itself is very risky and costly. Yet, if they want to stay at the top, the large firms must keep innovating, even while knowing it is likely that the smaller firms will eventually benefit from those innovations. My paper finds evidence of convergence, but also of divergence. That is, fast productivity growth is concentrated at the bottom and at the top of the productivity distribution. The very small, low-productivity firms grow fast, but so do the large high-productivity ones. This result is consistent with what the Organization for Economic Cooperation and Development documents in their report The Future of Productivity. But the result is salient because it implies that there is a “middle productivity trap,” where firms, once they reach average levels of productivity, will lag behind those at the very top. This trap could point to existing market frictions that hinder the spread of innovations from the top to the bottom. Moreover, it is consistent with two important facts: First, the widening productivity dispersion—a phenomenon that has been happening in the U.S. since the mid-1990s—and, second, the increasing market share of “superstar” firms. These both could very well be related to the slowdown in total productivity. Productivity is the most important determinant of economic growth, and in turn, of living standards more generally. As Paul Krugman—Nobel Laureate in economics—once put it, “Productivity isn’t everything, but, in the long run, it is almost everything.” The challenge for policymakers is to focus on the long run and to identify the market frictions that are causing most firms to lag behind.

GS economists write in a new report that these breakthroughs “imply a remarkable pace of healthcare innovation that could significantly improve health outcomes and enable people to live better and longer lives. While the primary goal of healthcare innovation remains raising care quality, these efforts could generate positive spillovers to the macroeconomy as well.” Love the sound of that. So what might the macroeconomic effects be? For starters, a key piece of context needs to be understood: Health has big economic implications. As the GS economics team explains, poor health imposes economic costs through multiple channels: First, it lowers labor force participation by two to three percentage points, as people in poor health are less likely to work. Second, health issues increase absenteeism and reduce hours worked by around two percent a year. Third, early death from disease subtracts 0.2 percentage points per year from potential labor force growth. Finally, caregiving responsibilities for sick relatives reduces total labor supply by three percent. GS puts it all together: Combining current losses in hours worked and labor force participation from sickness and disability, early deaths, and informal caregiving, we estimate that GDP would potentially be over 10% higher if poor health outcomes did not limit labor supply in the US. These estimates suggest significant upside to economic output if the recent wave of healthcare innovation leads to an improvement in health outcomes that reduces the economic burden of poor health.

The ‘innovation gap’ haunts Big Pharma, and the race is on for the next blockbusters. The next big innovation wave is out there, and as pharmas expect massive losses without enough internal R&D to fill those shoes, smaller biotechs beckon. History often repeats itself, and the pharmaceutical industry’s current “innovation gap” is one they’ve seen before — the world’s largest companies find themselves in the precarious position of needing to make big new bets before their once reliable cash cows stumble. The innovation gap, also called the innovation deficit, is happening as companies watch some of their bestselling products of the last decade approach the end of patent protection — and with biosimilar competition on the horizon, revenues are bound to erode. R&D pipelines aren’t likely to make up the difference in time without some major overhaul, experts say. Patent expirations are expected to put $226 billion in global prescription sales at risk through 2026, according to a from Evaluate Pharma. And the replenishment rate of R&D is expected to drop by more than 50% over the next five years, EY analysts in another report. Contrary to what the term might imply, the innovation deficit doesn’t come from a lack of new scientific advances, says industry analyst Arda Ural, EY’s markets leader for health sciences “The innovation deficit is not because productivity is low,” Ural says, noting there were approved by the FDA last year. “The challenge here is the imbalance between the loss of exclusivity on the top line, and that top line not being replenished by the pipeline for Big Pharma.” To persevere, pharmaceutical giants will need to look for new acquisition targets that give them a leg up as they tiptoe toward the edge of the patent cliff, and small biotechs might offer some much-needed pipeline rejuvenation “I think first and foremost, we have to be science-driven and ask: ‘Is there science and good data to support an acquisition?’ And I think, as we’re seeing in the broader biotech market, it’s been challenging.” Inflection points, then and now--The industry is facing a number of substantial patent cliffs, as some of the biggest branded drugs like AbbVie’s Humira, Merck & Co.’s Keytruda, Johnson & Johnson’s Stelara and more will very likely see biosimilar competition within the decade. Bristol Myers Squibb watched as generics of its mega-blockbuster Revlimid entered the market this year. Ural calls it an inflection point for the industry, and looking back 10 years, drugmakers underwent some of these same changes. “Going into the 90s, it was all small molecules addressing more common conditions like hypertension [and drugs like] antidepressants, statins and anti-diabetic medicines, and they were all hitting the cliff around the early 2010s, which created this imbalance between the top line not being supported by the pipeline,” Ural says. Ironically, the biologic monoclonal antibodies coming off patent now were the big innovations that saved the pharmaceutical industry’s top line back then. The question now is whether they can pull off that same trick again by leaning into emerging innovations. “The next inflection point is going to be the cell and gene therapies targeting oncology, rare diseases, neurology,” Ural says. “Gene editing like CRISPR, plus the newly validated mRNA and RNAi platforms are coming to fruition to help mitigate [and help] the industry to get back on that growth path.” Riding that next wave of innovation to overcome the patent cliff deluge will require some crafty investing, Ural says. Luckily for pharma, the big companies are flush with cash and smaller biotechs are valued well below what they once were, providing opportunities to get in on the ground floor. The biotechnology index toward the end of 2021 as biotechs reaped the benefits of having innovated in the face of COVID-19, but the index took a sharp downturn into 2022. Ural says the biotech sector became a story of haves and have-nots — more mature companies with marketed products or near-term catalysts in their pipeline were hurt less after the pandemic share prices wore off while smaller companies with earlier-stage candidates tumbled a lot further. Overall, it was a net loss. “These smaller biotechs need to avoid distress warnings, avoid cash burns beyond their means, and they need to get to the next value creation point,” Ural says. “They look to pharmas, who then need to be smart about where they want to take bets, even though those bets aren’t as expensive as they used to be a year ago.” Novartis’ CEO, Vas Narasimhan, is looking carefully at the reasonable options on the biotech table and what innovations are out there that could help build the company past upcoming challenges, he said Tuesday during the company’s first-quarter earnings call. “When you look at the pullback in the [biotechnology index] … many companies are trading below even the cash they have on hand,” Narasimhan said. “But I think first and foremost, we have to be science-driven and ask: ‘Is there science and good data to support an acquisition?’ And I think, as we’re seeing in the broader biotech market, it’s been challenging.” Of course, for the pharma giants, the more cash you have, the better your options are. J&J’s CFO, Joe Wolk, said on the company’s own first-quarter earnings call last Tuesday that more than $20 billion in cash flow generation gives them the firepower they would need to bring in new assets. One of J&J’s best sellers, Remicade, is already facing competition and ongoing sales dips. “I’ve got every confidence that we’ll be able to do small-, medium- and large-scale acquisitions should the right opportunity present itself,” Wolk said. “Whether it’s near-term or long-term, I think we’re in a very good position to utilize today’s cash and hopefully that which we generate tomorrow.” Ural sees these big pharmas lining up for early innovation markets to get ahead of their respective competitive headwinds. “Foundational shifts are indicating that the industry needs to set itself up for the next wave of growth,” Ural says. “Every pharma needs to take their positions.” Even some companies that never partake in the M&A rat race have joined the fray. Regeneron, which has always opted for partnerships over acquisitions, last week it would buy biotech Checkmate Pharmaceuticals for $250 million. Checkmate’s cancer drug in development could someday help Regeneron fill some big shoes — its foundational drug Eylea’s patent cliff is coming up halfway through this decade. The treatment pulled in almost in 2021. “This is the business cycle,” Ural says. “This is an industry driven by science and medical innovation.”

WASHINGTON (AP) — The nation’s economy slowed sharply last quarter to a 1.6% annual pace in the face of high interest rates, but consumers — the main driver of economic growth — kept spending at a solid pace. Thursday’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — decelerated in the January-March quarter from its brisk 3.4% growth rate in the final three months of 2023. A surge in imports, which are subtracted from GDP, reduced first-quarter growth by nearly 1 percentage point. Growth was also held back by businesses reducing their inventories. Both those categories tend to fluctuate sharply from quarter to quarter. By contrast, the core components of the economy still appear sturdy. Along with households, businesses helped drive the economy last quarter with a strong pace of investment. The import and inventory numbers can be volatile, so “there is still a lot of positive underlying momentum,’' said Paul Ashworth, chief North America economist at Capital Economics. The economy, though, is still creating price pressures, a continuing source of concern for the Federal Reserve. A measure of inflation in Friday’s report accelerated to a 3.4% annual rate from January through March, up from 1.8% in the last three months of 2023 and the biggest increase in a year. Excluding volatile food and energy prices, so-called core inflation rose at a 3.7% rate, up from 2% in fourth-quarter 2023. From January through March, consumer spending rose at a 2.5% annual rate, a solid pace though down from a rate of more than 3% in each of the previous two quarters. Americans’ spending on services — everything from movie tickets and restaurant meals to airline fares and doctors’ visits — rose 4%, the fastest such pace since mid-2021. But they cut back spending on goods such as appliances and furniture. Spending on that category fell 0.1%, the first such drop since the summer of 2022. Gregory Daco, chief economist at the tax and consulting firm EY, noted that the underlying economy looks solid, though it’s slowing from last year’s unexpectedly fast pace. The rise in imports that accounted for much of the drop in first-quarter growth, he noted, is “a sign of solid demand” by American consumers for foreign goods. Still, Daco said that the economy’s “momentum is cooling.” “It’s unlikely to be a major retrenchment,” he said, “but we are likely to see cooler economic momentum as a result of consumers exercising more scrutiny with their outlays.’’ The state of the U.S. economy has seized Americans’ attention as the election season has intensified. Although inflation has slowed sharply from a peak of 9.1% in 2022, prices remain well above their pre-pandemic levels. Republican critics of President Joe Biden have sought to pin responsibility for high prices on Biden and use it as a cudgel to derail his re-election bid. And polls show that despite the healthy job market, a near-record-high stock market and the sharp pullback in inflation, many Americans still hold dim views of Biden’s handling of the economy. Last quarter’s GDP snapped a streak of six straight quarters of at least 2% annual growth. The 1.6% rate of expansion was also the slowest since the economy actually shrank in the first and second quarters of 2022. The economy’s gradual slowdown reflects, in large part, the much higher borrowing rates for home and auto loans, credit cards and many business loans that have resulted from the 11 interest rate hikes the Fed imposed in its drive to tame inflation. Even so, the United States has continued to outpace the rest of the world’s advanced economies. The International Monetary Fund has projected that the world’s largest economy , up from 2.5% last year and more than double the growth the IMF expects this year for Germany, France, Italy, Japan, the United Kingdom and Canada. Businesses have been pouring money into factories, warehouses and other buildings, encouraged by federal incentives to manufacture computer chips and green technology in the United States. On the other hand, their spending on equipment has been weak. And as imports outpace exports, international trade is also thought to have been a drag on the economy’s first-quarter growth. Kristalina Georgieva, the IMF’s managing director, cautioned last week that was that it was ”taking longer than expected” for inflation to reach the Fed’s 2% target, although price pressures have sharply slowed from their mid-2022 peak. Inflation flared up in the spring of 2021 as the economy rebounded with unexpected speed from the COVID-19 recession, causing severe supply shortages. Russia’s invasion of Ukraine in February 2022 made things significantly worse by inflating prices for the energy and grains the world depends on. The Fed responded by aggressively raising its benchmark rate between March 2022 and July 2023. Despite widespread predictions of a recession, . Hiring so far this year is even stronger than it was in 2023. And , the longest such streak since the 1960s. Inflation, the main source of Americans’ discontent about the economy, has slowed from 9.1% in June 2022 to 3.5%. But . Though the Fed’s policymakers signaled last month that they expect to cut rates three times this year, they have lately signaled that they’re in no hurry to reduce rates in the face of continued inflationary pressure. Now, a majority of Wall Street traders don’t expect them to start until the Fed’s September meeting, according to the CME FedWatch tool.

Prior to joining Niskanen, Lindsey was vice president for research at the Cato Institute. From 2010 to 2012, he was a senior scholar in research and policy at the Ewing Marion Kauffman Foundation.

When we take the longer view, we can see a fundamental mismatch between the policy design of intellectual property protection and the policy requirements of effective pandemic response. Although patent law, properly restrained, constitutes one important element of a well-designed national innovation system, the way it goes about encouraging technological progress is singularly ill-suited to the emergency conditions of a pandemic or other public health crisis. Securing a TRIPS waiver for COVID-19 vaccines and treatments would thus establish a salutary precedent that, in emergencies of this kind, governments should employ other, more direct means to incentivize the development of new drugs.

Pharmaceutical companies were hailed during the COVID pandemic, for having produced vaccines in record time. However, it was their blinkered approach to profit maximisation that was primarily responsible for the gross inequity in vaccine access around the world. These companies struck secret deals with governments, prioritised high-income countries, sold vaccines at excessive prices, refused to share intellectual property, and monopolised supply. The original “zero draft” of the treaty recognises that “equity should be a principle, an indicator and an outcome of pandemic prevention, preparedness and response”. Although many countries provide lip-service to the importance of equity as a guiding principle for the treaty, they must translate this rhetoric into action. To achieve truly equitable access to health tools during a pandemic, countries must boldly challenge the orthodoxy of intellectual property (such as patents) laws at the root of the inequitable COVID-19 response, mandating pharmaceutical companies to share technology and know-how of life-saving drugs, particularly to ramp up manufacturing capacity in low- and middle- income countries. And the record of richer countries on promoting equity so far has not been good. In fact, countries in the Global North – US, UK, Canada, Australia, and Japan, among others – have consistently opposed provisions in the treaty that mandate action from companies or countries. A leaked draft of the negotiations is peppered with comments from country delegates that blunt the edge of the mandatory provisions with clauses such as “where appropriate and feasible”, “voluntarily”, and “on mutually agreed terms”. What we have learned from previous pandemics is that leaving global health dependent on the generosity of rich countries and pharma corporations in this way does not lead to improved access to medicines. In fact, three years into the COVID-19 pandemic, there have only been a couple of instances of pharma companies voluntarily licensing production to companies in the South. At the same time, radically new models like that of the mRNA Technology Transfer Programme based in South Africa face an uncertain future, as they wade through the thicket of patent barriers around mRNA technology. BATTLE LINES BETWEEN GLOBAL NORTH AND SOUTH These treaty negotiations have laid bare the geopolitical tensions between the Global North and South. Whereas countries such as Nigeria, Chile, Brazil, and Egypt support time-bound waivers of intellectual property rights, countries such as the US and UK oppose them. Another disputed issue between the two blocs is that of “pathogen access and benefit sharing”. Crucial genetic data – about the pathogens that cause infections – needed to develop new drugs comes from the Global South, and yet these countries are pushed to the back of the queue for these same drugs. It is perverse that the very people taking part in trials to develop these lifesaving medicines are last in line to get the finished vaccines. South African scientists compared this to a country making goods for the world and watching them be shipped to richer countries, while its own citizens starve. Similarly, the principle of “common but differentiated responsibilities (CBDR)” has been a bone of contention. The principle, originally applied in climate justice negotiations, means that states have different obligations when it comes to global challenges, and that these can vary depending on how wealthy a country is and how much it has historically contributed to the problem (so rich countries have greater responsibility to tackle climate change, for instance). Brazil, the Africa Group, Malaysia, India, and small island countries support applying such differentiated responsibilities in the pandemic treaty, but Japan, US, and the EU do not. PEOPLE OVER PROFIT We are not going to be any better prepared for the next pandemics if countries continue to put their national interests over global public health. Profit will not drive the vast and more equitable manufacturing and distribution effort needed to meet the challenge of a global health emergency. We should not promote the same old colonial model where richer countries control access to resources, as poorer nations wait, dependent on their charity. Without concrete actions to meet the health needs of people in poorer countries, the treaty will be nothing more than beautiful words on paper. The challenge of future pandemics will loom large at next week’s World Health Assembly. What is clear is that the new pandemic treaty needs to radically challenge the status quo and take on special interests that have led to profit, not people’s health, driving policy making.

Compromise must be found. Without a treaty, the world will remain as unprepared for the next pandemic as it was for COVID-19, which killed roughly 7 million people and cost the global economy more than US$12 trillion. But there can be no compromise on one thing: there must be equity in access to vaccines, medicines and other supplies needed to save lives. This issue has been the chief sticking point in the negotiations so far. To break the deadlock, countries must commit to licensing the intellectual property (IP) and sharing the knowledge needed to make vaccines and drugs with qualified manufacturers in low- and middle-income countries (LMICs) in a pandemic. Then, all regions of the world will be able to produce their own vaccines and drugs rather than relying on promises of supplies from other countries that, predictably and understandably, will prioritize protecting their own populations. [Graphic Removed] But the United States and the European Union have been reluctant to make concrete commitments that would ensure that vaccines and therapeutics are distributed more equitably. And yet, they have pushed strongly for the treaty to include a binding provision that all countries share samples and genomic sequences of pathogens. Eswatini, on behalf of 47 African countries, has proposed a trade-off. It states that these countries would consider rules on sharing genetic data and other outbreak information provided all member states of the World Health Organization (WHO) agree on an “access and benefit sharing mechanism”. It would be a system promising access to data in return for the benefits developed on the basis of those data — such as medicines and vaccines. The logic of this proposal is compelling. Under existing international regulations, all nations must sound the alarm and share pathogen data in the event of a disease outbreak. Wealthy countries have the upper hand because they have the research and biotechnology capacity to act swiftly on the information and put it to use making lifesaving products. Countries with less capacity must wait for action by others, and then hope for goodwill. This imbalance was on display during the COVID-19 pandemic. Take what happened in the case of the Omicron variant of the coronavirus SARS-CoV-2. South African researchers alerted the world to the emergence of Omicron and rapidly shared its genome sequence. And yet the country was unable to obtain COVID-19 vaccines made by US and European pharmaceutical companies for much of 2021. Make access binding To lessen the reliance on goodwill, many middle-income nations in Africa, Asia and Latin America are also pushing to make more medicines and vaccines themselves and to expand their own research-and-development capacity. One way to do this is for the pandemic treaty to contain binding stipulations around sharing patents and transferring technology during emergencies. Another way is through concrete commitments from high-income countries to help fund the building of scientific expertise and infrastructure in lower-income countries, along with funding for strengthening regulatory institutions. A number of countries have also put forward the idea of attaching conditions to taxpayer-funded research to ensure that the results are openly available, that IP is licensed and that international collaborations are enhanced. [Graphic Removed] Predictably, opposition to all such options is fierce. The International Federation of Pharmaceutical Manufacturers and Associations, based in Geneva, Switzerland, has said it opposes any mechanism that links access to samples and genomes with the distribution of pharmaceutical products. It warns that provisions that mandate IP licensing in an emergency will hamper innovation, and stresses that agreements on drug and vaccine sharing must be voluntary.

Let us make no mistake: our fight against coronavirus is far from over. Worldwide, trends are worrying. Close to a million lives have been directly lost to the disease and essential health services are disrupted for millions. With jobs at risk, governments have pumped more than $10 trillion into economies to safeguard livelihoods. And people around the world have made personal sacrifices to their daily lives for the greater good. A global pandemic requires no less than a world effort to end it. None of us will be safe until everyone is safe. Global access to coronavirus vaccines, tests and treatments for everyone who needs them, anywhere, is the only way out. A global pandemic requires a world effort to end it – none of us will be safe until everyone is safe - Ursula von der Leyen, President of the European Commission This is a historical stress test for global cooperation. But we are ready to meet this challenge. This is why we have launched the Access to Covid-19 Tools (ACT)-Accelerator. This global collaborative framework brings together governments, scientists, businesses, philanthropists and global health organizations such as the Bill & Melinda Gates Foundation, CEPI, FIND, Gavi, the Vaccine Alliance, The Global Fund, Unitaid, Wellcome, WHO and the World Bank. The ACT-Accelerator drives the research, development and delivery of tests, treatments and vaccines across the world. And it has already achieved impressive results; 1,700 clinical trials, as well as 100 countries surveyed to identify capacity gaps. It did this in only five months and on a 3 billion US dollars budget. If we manage to reach the ACT-Accelerator’s investment needs, estimated at 38 billion US dollars, just imagine what we could achieve and how fast we could achieve it. The ACT-Accelerator partners’ calculations show that fully financing the ACT-Accelerator would pay back the investment very quickly, once the crisis is ended and global trade and travel are restored. Simply put: we will recover much faster from this crisis with investment in the ACT-Accelerator. It won’t just save lives: it will provide the best stimulus possible as economies will be able reopen together. As with the 2008 financial crisis, economic recovery over the medium and longer-term needs a global approach to restore trade and trust amongst all countries. Equitably sharing a vaccine and other health tools is not charity; it is bulletproof economics. The ACT-Accelerator reduces costs for governments by providing efficiencies of scale and purchasing power. It also covers the full spectrum of tools needed against the virus – including personal protective equipment and oxygen – and makes sure they are accessible to all countries. A total of 156 economies, representing nearly two-thirds of the global population, are now committed to or eligible to receive vaccines through COVAX, the vaccine arm of the ACT-Accelerator, which is working to find a safe and effective vaccine whilst protecting health workers and our vulnerable people, including in low and medium countries. As leaders gather virtually at this United Nations General Assembly, a historic opportunity but also a moral imperative beckons. It is our chance to mobilise global leaders and make them understand how truly vital it is to pool our resources together. The world already came together under the Coronavirus Global Response. Thanks to an unprecedented effort of global solidarity, we managed to raise significant funding to get the work started. But more is needed. Today we invite leaders to come together and resource the ACT-Accelerator. Let us invest in our best chance at a coronavirus-free future for all.

Generally, all vaccines work through these three steps: Firstly, antigens and used adjuvants will be uptake by immune cells or other cells depending on the route of administration. Secondly, specified antigen-presenting cells (APCs) will be matured, and the vaccine antigens will be processed. Finally, specific B and T lymphocyte cells will be produced, and a proper immune response will be established. APCs, including dendritic cells, macrophages, and B cells, can take up the vaccine’s antigens and process the antigens into peptides suitable for expressing major histocompatibility molecules (MHCs) I or II.17 Naïve T cells interact with APCs MHC, recognize the vaccine antigen epitopes and are primed into either cytotoxic or helper T cells. In addition, B cells also will be activated through interaction with soluble or surface antigens by their receptors (BCR) and differentiated into plasma or memory B cells for the production of antigenspecific antibodies.4 The first step of vaccine development is designing of vaccine regarding the chosen platform (e.g., subunit, viral vector, mRNA, etc.). New designing methods and tools have made significant advances in the rational designing of vaccines due to an accumulated understanding of the biological and immunological mechanisms of immunity and technological understandings in the last few decades.18 The mode of action and immunological interaction between the immune system and the vaccine could be used initially to understand their efficacy, safety, and expected benefit for the vaccinated individual. In addition, different bioinformatics tools,19 and immunological databases, will be beneficial and, most times, essential for designing vaccines.20 Choosing a particular vaccine platform can depend on several factors, such as the level of expected protection, the mode of action, the characteristics of the pathogen, or the disease elimination strategy and time.21,22 Traditional and more established methods, including subunit vaccines, need more time to develop. However, most traditional platforms have been tested in different large populations for many years, and their advantages and disadvantages are well known.23 Also, designing tools for these platforms are well-developed and accessible. In contrast, regarding the limitations of traditional platforms (discussed later), if time is a critical factor, for example, when an infection is spreading rapidly and is becoming an epidemic and pandemic situation, there is an urgent need for rapid vaccine development.24 In addition, when a biological attack or bioterrorism has occurred with infections, R & D teams should turn to methods with decreased designing time, such as third-generation DNA and mRNA vaccines.25,26 These vaccines have many advantages in design and production over traditional vaccines, which were proven in the 2020 pandemic COVID-19.27,28 Although there are many challenges and unknowns in using new vaccine platforms, in emergency conditions such as the recent pandemic and unexpected biological attacks, the priority is the rapid design and production of a vaccine and vaccination to savelives.29

The heightened sense of vulnerability after the 2001 anthrax attacks in the United States attacks has brought bioterrorism to the forefront of public attention (Koblentz, 2009). In 2008, the Department of Homeland Security (DHS) stated that, “the threat posed by biological agents employed in a terrorist attack on the United States is arguably the most important homeland security challenge of our era. Even if there are fewer casualties, additional second-order consequences (including psychological, social, and economic effects) would dramatically compound the effects” (Radosavljevic, 2009). The anthrax attacks of 2001, coined the Amerithrax attacks, revealed a deep-seeded vulnerability within the U.S. During those attacks, 20 billion anthrax spores were released from half a teaspoon of powder. Infecting 22 known people and resulting in 5 deaths, this case of bioterrorism cost roughly $6 billion (Thompson, 2006). While it was later reported that an American scientist, Dr. Bruce Ivins, was the main suspect for the Amerithrax attacks, there continues to be fake attacks involving baby powder and other faux anthrax. Moreover, there are indeed terrorist organizations that have sought to use bioweapons. Al Qaeda leader Abu Hamza al-Muhajir stated in a 2006 audiotape that he implored scientists and experts to join al Qaeda in the testing and creation of biological weapons (Thompson, 2006). The attention that bioterrorism garners has far reaching consequences that cause economic, psychological, and political disruptions. Yet the reality of these weapons suggests a more lackluster outcome. Attacks like those of the Rajneeshees cult in Oregon, which infected hundreds of people with salmonella, are considered success stories, but cults like Aum Shinrikyo, which had the monetary means to employ these weapons, never experienced that kind of success. Indeed, because it is impossible to completely defend against all attacks, threat assessment is crucial. The disputed degree of U.S. vulnerability has become even more heated among scientists, with some arguing that the U.S. may have over-assessed the threat (Thompons, 2006). Many subject matter experts have pointed to the instantaneous wave of federal support that biodefense received after the Amerithrax attacks, and that while this support was needed, there was little assessment into the realities of the bioterrorist threat. Relatively little effort has been made to determine the threat of terrorist use of bioterrorism; instead, the U.S. has focused on internal vulnerabilities. Dr. Leitenberg points out that “within 4 years, almost $30 billion in federal expenditure was appropriated to counter the anticipated threat. This response took place in the absence of virtually any threat analysis” (Leitenberg, 2005). Vulnerability is an ongoing reality, but one must also consider whether the threat of bioweapons is as great as the U.S. government previously estimated. While there is an undeniable U.S. vulnerability to bioweapons attack, the lack of capabilities to carry out such attacks has perhaps created a hypersensitivity to such threats. Non-state actors have in the past, and will continue in the future, to consider and employ the use of bioweapons. However, through an analysis of past, small-scale attacks in the U.S., the barriers to successful large-scale bioterrorism can be identified. Diffusion-of-innovation studies address why and at what rate new ideas (such as technologies) spread throughout a culture or society. The most popular example Rogers points to is the unsuccessful attempt to improve sanitation and health in Peru during a health two-year health campaign. The project focused on boiling water and the link between sanitation and illness but was largely deemed a failure because campaign workers failed to identify the social norms and beliefs that saw boiled water as diseased. Rogers pointed out that the societal habits and norms within a society will outweigh the innovation regardless of its benefit to them (Rogers, 1983). In effect, this theory discusses the question of why certain ideas become popular while others never take off. With this concept in mind, analyzing why bioweapons have proven their efficacy, yet have not been utilized on a large-scale by non-state actors, reveals substantial barriers to utilization This thesis seeks to point out the substantial hurdles non-state actors face when attempting to use bioweapons. It will do this by addressing several key points in the process of using bioweapons, from procuring the agent to dissemination and even to the impact of environmental conditions. An analysis of specific historical cases of bioterrorism through such a capabilities assessment will demonstrate the prevalent deterrents terrorists face when considering and deploying bioweapons. In the Weapons of Mass Destruction Commission’s 2006 Bioterrorism and Threat Assessment, threat assessment is broken down into a diagram as shown in Figure 1 (Ackerman, 2006). The diagram in Figure 1 and equation in Figure 2 address the role of threat, likelihood of attack, motivation, capability, vulnerability of assets, hazard posed, and value. In the past, assessments of bioterrorism have focused on only a small section of these variables, mainly the consequences of attacks, value of assets being defended, and vulnerabilities. This analysis will focus on the capabilities and motivations of potential bioterrorists and assess their impact on actual usage of bioweapons. Bioterrorism Threat Assessment Figure 1. Bioterrorism Threat Assessment (Ackerman, 2006) Figure 1 presents these components, indicating the relationship between the intention and capability of an attacker. The equation demonstrated in Figure 2 also relays the importance of capabilities and motivation in the equation regarding threat of attack. This equation points to the role of intent, vulnerability, and capabilities in regards to the threat of an attack (Thompson, 2006). Previous analyses have focused on the vulnerability component of this equation. The emphasis on capabilities and motivation is the driving force behind this analysis in order to provide a better understanding of terrorist capabilities when pursuing bioterrorism. This thesis will attempt to do this through an analysis of the hurdles that inhibit utilization.

Pork and waste. Six years after the fall of the Twin Towers, the devastating blow to the Pentagon, and the inspiring courage of the passengers and crew of United Airlines Flight 93, antiterrorism funding is an exercise in pork-barrel spending and high-profile projects of dubious value. On the one hand, we have money being spent on petty projects designed to defend "targets" that are more at risk from a meteor strike than a terrorist attack, like the town of Madisonville, Texas. As reported by The Dallas Morning News, the town, population 4,200, used a federal homeland security grant to purchase a $30,000 customized trailer. The trailer can be used as a mobile command center, but city officials admitted it is more likely to be used as an information and first-aid booth during the town's annual mushroom festival. Or there's the story of Dillingham, Alaska, population 2,400. Last year, the Anchorage Daily News noted that Dillingham — which doesn't have a single street light — had received $202,000 dollars in homeland security funding to purchase surveillance cameras. On the other hand, the danger of big, headline-grabbing threats has been ameliorated to a limited extent — but these threats, like dirty bombs or bioterrorism, have always been inherently unlikely to come to pass on anything like the apocalyptic scale feared by some. Ironically, in our effort to thwart terrorists, we're making things easier for them. Without lifting a finger and starting down the long, difficult, and expensive road of actually making a viable biological, chemical, or nuclear weapon of mass destruction, the terrorists have managed to distract us with the specter of such a device. Meanwhile, we remain vulnerable to other, less dramatic but perhaps much more realistic lines of attack. Let's start with dirty bombs, a staple of media-fed fears. In the typical scenario, a group of terrorists steal a few ounces of radioactive material like cobalt 60 from a food irradiation facility. This cannot be used to make a nuclear bomb, but it gives a lethal radiation dose in close quarters. The terrorists wrap the cobalt 60 around a conventional explosive, detonate it, and shower a city with deadly fallout. To detect dirty bombs in the offing, gamma and other radiation detectors have been deployed to airports and seaports as well as police departments around the country. But there are still many unprotected ports. If drug cartels can regularly sneak tons of narcotics into and around the country, surely terrorists can do the same with a much smaller cache of radioactive material. What is really keeping us safe is probably not those radiation detectors but the basic physics of trying to carry out a radioactive attack. In order to contaminate a large area with enough radioactive material to pose a major health hazard, the dirty bomb would have to be packed with so much cobalt 60 (on the order of a few ounces in this case) that the terrorists would die of radiation poisoning within minutes of exposure to their own weapon. A practical dirty bomb's main effects would be from fear, not radiation, with both the Department of Homeland Security and the American Institute of Physics predicting few deaths from cancer or radiation poisoning, even in densely populated areas. "The radioactivity released by dirty bombs is not life threatening," says Angelo Acquista, former medical director of the Office of Emergency Management in New York City and author of The Survival Guide: What to Do in a Biological, Chemical, or Nuclear Emergency. Writing in MIT's Technology Review, Richard Muller, a senior scientist at the Lawrence Berkeley National Laboratory in California, calculated the radiation exposure — measured in a unit known as the rem — that city residents would receive from a practical dirty bomb. His analysis concluded that no one would receive sufficient radiation to induce radiation illness, let alone death, and that the long-term risk of developing cancer was only fractionally increased. But with lawmakers and government agencies ratcheting up the rhetoric about dirty bombs in their lobbying for more funding, the average citizen can hardly be blamed for considering dirty bombs a grave threat — a perfect example of well-intentioned efforts that would amplify, not dampen, the impact of a terrorist attack. Bioterrorism is another overhyped threat. According the Center for Arms Control and Non-Proliferation, based in Washington, D.C., since 2001 federal and state governments have spent $41.5 billion combating bioterrorism, with another $6.8 billion on the way. The money has been spent on things like improving sensors to detect an attack and on building up a stockpile of drugs to combat various pathogens like anthrax. Faced with the prospect of terrorists releasing a bioweapon that spawns a deadly nationwide epidemic, quickly overwhelming hospitals and other health services, surely this seems a reasonable outlay. As with dirty bombs, the main thing keeping us safe from bioattack is the nature of the weapon itself. The most dangerous and virulent pathogens, like the Ebola virus, kill their victims too quickly, so an infected person is able to spread the disease to only a relatively small number of people before succumbing. According to the Centers for Disease Control and Prevention, Ebola has an incubation period of 2 to 21 days and kills 50 to 90 percent of those infected within two weeks of the onset of symptoms. This produces terrifying but limited and short-lived outbreaks. The second problem terrorists face is how to infect victims with their disease of choice. Aerosolizing the pathogen — so that it can be released and inhaled by a large number of people — is an obvious approach, but this is difficult to do, not least because many infectious agents can't survive long outside a host. Anthrax is seen as a particular threat because it occurs in spore form, meaning that it can be transported easily and will remain potent for decades. In principle, inhaling just a couple of spores could spark a fatal infection. More realistically, being exposed to several thousand spores would be required for most people to develop symptoms, but that still amounts to a dose weighing far less than a millionth of an ounce. It's no surprise, then, that anthrax was used in the still-unsolved bioterror mailings that occurred in the weeks after 9/11. The attacks sparked frenzied countermeasures among the general public, with people ironing their mail to kill spores and reports of people attempting to obtain personal stockpiles of the antibiotic Cipro. The government set up more elaborate schemes to use electron beams to sterilize mail. Yet despite the mailings' status as the most sophisticated and deadly series of bioterrorist attacks in the United States to date, just five people were killed and another 17 sickened. Compare this with the average annual death toll of 36,000 Americans from ordinary influenza. Chemical weapons are a more clearly evident risk: The sarin nerve gas that cultists used to attack the Tokyo subway killed 12 and injured hundreds in 1995. As a consequence, stockpiles of the nerve gas antidote, called Chempacks, have been put in place in cities around America, and detection systems are being developed to warn of an attack and have already been deployed in a few places like Grand Central Terminal in New York City. First responders have also been provided with field supplies of nerve gas antidote, with each ambulance in New York City, for example, carrying 60 Mark I kits, says Neal Richmond, former deputy medical director of the New York Fire Department. Each Mark I kit has two autoinjectors, one containing atropine, which works to counter-act the immediate effects of the nerve gas, and the other a drug called 2-PAM. which helps the body clear the nerve gas out of its system. All that said, for those caught in a chemical attack, the available countermeasures are not exactly reassuring. A chemical weapons attack would be a "mass casualty event," Richmond warns, meaning that emergency responders would expect to be overwhelmed by the number of sick and dying people. In such an event, the rules for treating victims that most people have come to expect from emergency responders are altered. "You want to use available resources to get the greatest benefit for the greatest number of people instead of focusing all your resources on the sickest people," Richmond says. Rather than treating the sickest first, rescuers would treat the most likely to survive first, evacuating those who can walk or crawl to a decontamination area before sorting out the rest. In a chemical attack, the task of first responders would be further complicated by their bulky protective suits. These make normal medical examinations impossible, forcing responders to rely on "noxious stimulus triage" — nicknamed kick triage — to sort out the living from the dead. "You don't really kick them, but you do shake them, move them" to see if they react, says Richmond. "Anyone who doesn't appear dead gets dragged out" and injected with three Mark I kits. If that stabilizes the victim long enough to reach hospital care, chances are he will survive, as more antidote can be administered as needed to keep counteracting the nerve gas. If the victim's condition worsens before he can reach the hospital, however, he is unlikely to receive any additional antidote — especially if the antidote is in short supply — as the responders turn their attention to others. Richmond worries that despite all the elaborate planning made by the Department of Homeland Security and others to deal with chemical and biological attacks, mundane but important things aren't happening — like conducting enough drills to make sure that these plans actually get implemented properly. He also notes that a lot of money has been spent preparing for rare attacks, but emergency rooms around the country already have difficulties coping with routine patients: "We need to tackle building the everyday infrastructure in this country so that it's working (or every patient, every day. Then when the big things come down, we'll be pretty prepared." Another big part of the homeland security boondoggle is the formula used to dole out federal funds. Originally, after 9/11, homeland security funds were distributed according to a formula that first guaranteed each and every state a certain minimum level of funding and then divvied up remaining funds according to the size of state populations. Not surprisingly, the 9/11 Commission was horrified by such a simplistic approach, which gave money to states whether it was needed or not. Consequently, the commission recommended in its 2004 report that funding be based "solely on risks and vulnerabilities, putting New York City and Washington, D.C., at the top of the current list." Since then, there have been attempts to reform the formula to distribute funds based on the actual risk posed by terrorists. Unfortunately, these attempts have resulted in sometimes ridiculous results. Last year's much-derided analysis by the Department of Homeland Security reduced New York City's homeland security funding by 40 percent to $124 million, concluding that the metropolis contained no national monuments or icons — somehow skipping over the Statue of Liberty, the Empire State Building, the Brooklyn Bridge, and Wall Street, among others. Although some of New York's funding was eventually restored, the homeland security distribution formula is still far off the mark set by the 9/11 Commission. And so pork still abounds, prompting Congressmen Anthony Weiner and Jeff Flake to produce a list last March of the most absurd homeland security grants they could find. Standouts included $36,000 to Kentucky in 2005 to prevent terrorists from raising money at state bingo halls; $7,348 worth of bulletproof vests for the police and fire department dogs of Columbus, Ohio, in the same year; and the biggest whopper of them all, $8,000 in 2006 for a Wisconsin fire department's clown and puppet shows. The only silver lining is that these absurd preparations are probably not going to be needed. Why? Because terrorists like getting as much bang for their buck as anyone else, which is why conventional explosives, not exotic weapons of mass destruction, will probably continue to be their primary weapon of choice. "The reality is that conventional weapons are easier to manufacture, transport, and detonate," says Acquista, a point graphically illustrated by the recent propane-based car-bomb attacks in the United Kingdom. But let's imagine a worst-case scenario: A particularly advanced terrorist group does manage to set off a dirty bomb, or a bioweapon begins to spread throughout the population. The natural instinct — evacuate — may not be your best option, and in fact most Department of Homeland Security plans do not envision anything like attempting to evacuate an entire city except in the extremely unlikely event of the aftermath of an atomic bomb blast. Mostly this is because these kinds of attacks are much more limited in their geographic impact than our fear would lead us to believe and also because evacuating cities quickly is very difficult, as was demonstrated by New Orleans and the Hurricane Katrina debacle. Even on 9/11, when the destruction was confined to a small area of Lower Manhattan, it took six to seven hours to evacuate around 400,000 commuters by boat. With the subways out of commission, another 2.5 million Manhattan commuters made their way home as best they could, taking many hours in most cases and clogging bridges and roads. Should the worst happen, unless your dwelling is in immediate danger, the best advice may be to ignore all the government-fueled drama and stay home, at least temporarily. Following an atomic blast, for example, "after seven days, the radiation goes down about 90 percent," says Acquista, making evacuation at that time much safer. Acquista recommends sheltering underground in such a circumstance, which allows as much radiation as possible to be blocked by the ground and buildings above. In the event of a chemical attack, though, he recommends staying indoors aboveground, because nerve agents are heavier than air and hence will accumulate in basements. And although the suggestion that citizens keep duct tape and plastic sheeting on hand was much reviled when made in 2003 by then Secretary for Homeland Security Tom Ridge, Acquista believes it would be useful in a chemical attack to seal a refuge with tape and sheeting until the danger passes, because "most chemicals dissipate very rapidly." Homeland security, it seems, really does begin at home.

The Covid-19 pandemic revealed that, in a global health emergency, all the aspirational rhetoric about international cooperation didn’t mean much. Once groundbreaking Covid-19 vaccines became available a year into the pandemic, rich countries looked out for themselves and poorer countries were largely left behind. That brought recriminations, but also a pledge from the world’s nations to learn from those mistakes and create a better playbook for when a future pathogen inevitably threatens the world. So at the end of 2021, the World Health Organization (WHO) announced that the global community would negotiate a pandemic treaty to set the rules for international cooperation in future public health crises. Those efforts were supposed to reach a triumphant conclusion this May, at the World Health Assembly in Geneva, where the final product of treaty negotiations would be reviewed and ratified by the world’s nations. But the last few months of negotiations have instead been tumultuous. The same divisions between rich and poor countries that emerged during Covid are now threatening to derail what was meant to be a landmark achievement in protecting the world from catastrophic pandemics. The fundamental problem is that, much as they were in the thick of the pandemic, wealthy nations remain largely allied with Big Pharma against the Global South’s interests. The stalemate over sharing information about emerging diseases One major sticking point in the pandemic treaty is about coming to an agreement on sharing information about dangerous new pathogens — a key component of keeping the world safe from future pandemics. Africa in particular is the source of many emerging diseases that could pose a risk to humans. Under the system being contemplated in the pandemic treaty talks, once a potentially dangerous virus is identified, developing countries would share access to viral samples with developed countries, home to the bulk of the world’s biopharmaceutical industry. The industry would then take that information to begin developing medical countermeasures, like vaccines or new treatments. Then those new medicines would be shared equitably between the nations where they were developed and the nations that provided the raw material about the diseases. In exchange for providing pathogen samples, African nations want pharmaceutical companies to pay an annual fee to support a centralized system for sharing pathogen information and for sharing the medical products that are ultimately developed from that information, potentially managed by a major multilateral body like the WHO. They also want pharmaceutical companies to commit to making a certain percentage of the products developed from these pathogen samples (diagnostics, vaccines, medicines) available for free or for the cost of production in a future pandemic. But Big Pharma opposes both compensating countries for sharing pathogen information and the creation of a centralized bureaucracy to manage that process, arguing that it would slow down the development of medical breakthroughs. Drug companies have been largely supported in that position by the US and European Union. Big Pharma’s argument should be familiar to anybody who has followed the drug pricing debate in the US: Whenever a new regulation is proposed, the drug industry warns that it will stifle innovation. Research on drug development, however, suggests that may not be true. The pharmaceutical industry says it does not have a problem with reserving some of its products for low-income countries. But its conditions for providing that conflict directly with the desires of the Global South. Pharma companies want free, unfettered access to the pathogen information from the Global South. They also want intellectual property rights to treatments to be protected, which could make it harder for new medicines to get to developing countries by limiting the scale of production. (Relaxing IP rules, on the other hand, would make it easier for other parties to manufacture their own version of the medicines and distribute them in an emergency.) During Covid, the vaccination initiative Covax attempted to circumvent IP rights in order to quickly produce and distribute vaccines, but those efforts were delayed and ultimately watered down, in part with the support of international actors like the EU, where many big drugmakers are based. “By organizing its multilateral effort with a commitment to saving IP rights at the same time as saving lives, [COVAX] created a terribly limited and limiting vaccine supply system for underserved and excluded populations,” according to a recent analysis in the journal New Political Economy. Private interests could derail the pandemic treaty That is exactly the type of situation that a pandemic accord is meant to prevent. But the current stalemate suggests that the underlying dynamics that led to millions in the Global South missing out on Covid vaccines haven’t changed. Wealthy states remain too often beholden to their biopharma industries. They have established a complex web of regulations that protect the companies’ IP, giving nations first access to the drugs and vaccines their drugmakers produce. That entanglement has created what the authors of the New Policy Economy paper, Matthew Sparke of the University of California Santa Cruz and Owain Williams of the University of Leeds, describe as collusion between developed nations and the drug industry. “They serve to capture value from biomedical innovation in ways that limit global access to medicines while simultaneously entrenching the dominance of high-income countries, lead firms and the interests of investors,” they wrote. Many other questions about the pandemic treaty must still be resolved in the coming months, including the nature of the agreement itself. Should it be opt-in or opt-out? The latter would mean that it comes into force more quickly (and that some of its provisions could be watered down). But an opt-out treaty might be politically difficult in countries like the US, where broad swaths of the public are skeptical of global health authorities, and a Republican-controlled House may not ratify such an agreement. It is too early to declare the pandemic treaty dead — negotiators are in the midst of a two-week meeting to try to resolve these issues. But the obstacles are substantial. Pharma’s influence has frequently thwarted drug cost control efforts in the US and around the world. Let’s hope this time policymakers can overcome it.

This divergence of private incentives from public health needs widens in contexts of pandemic preparedness and response. First, forces of supply and demand mediated by price do not work well to respond either to the possibility of future pandemics or, on an emergency basis, to allocate resources and guide economic activity once the public health emergency has struck. Even in well working markets, price does a poor job of reflecting the value of being prepared for unknown future contingencies. The price mechanism does not and cannot capture the difficult-to-quantify and heavily discounted public health value of being better prepared in the uncertain event that a (corona) virus or other pathogen of a particular type will spread rapidly within economically profitable markets at some future time. Pandemic preparedness requires ‘inefficiencies’ from an economic point of view: carrying excess capacity, stockpiling equipment, and ensuring geographically spread production and distribution infrastructure that exceed market demand or for which there will never be any realized demand. It involves investing in the R&D of vaccines and treatments for pathogens that are likely to never emerge, and for diseases that are most likely to remain contained, and/or for pathogens that might mutate over time such that approved products might not work for future infections and outbreaks. Compounding these bleak economic prospects is the fact that outbreaks of infectious diseases often start with, and remain limited to, neglected regions and populations, where markets for pharmaceutical products offer limited economic potential. The 2014–2016 transnational Ebola outbreak, which affected primarily countries in West Africa, is a case in point. Coincidentally (or perhaps not), many of the promising leads on treatments for COVID-19 are based on advances made—but then stalled—in response to Ebola. Moreover, under current paradigms, pricing of any existing vaccines and drug products before the start of an outbreak is bound to grossly undervalue the preventative and therapeutic effects of such products. Once an infectious disease that threatens severe health outcomes starts spreading, it is sure to result in inelastic, and sometimes irrational, maximal market demand for treatments, regardless of individuals’ risk status and even regardless of product effectiveness. Panic increases the demand for any potential therapy dramatically, but leaves the ability to pay rather than health need or health benefit as the determinant of who gets the product in times of shortage. Infectious diseases like COVID-19 tend to spread more readily and have greater health effects on poorer communities, where purchasing power, and thus market demand, is low. But when a pandemic emerges, markets allocate resources based on who can pay the most, which reflects neither individuals’ need nor the best allocation for achieving public health goals. The tension between ability to pay and medical need is further compounded by the additional tension between individual demand and the public interest: while individuals rationally seek to maximize benefits for themselves and their loved ones, on a population level, herd response is the only method of effectively tackling pandemics, with herd immunity being the ultimate goal. Leaving the allocation of treatments to be decided by who can pay for them will inevitably lead to suboptimal results, to everyone’s detriment. This problem takes on an even greater dimension when we consider the needs of poorer countries outside of the USA, and the importance of considering not just treatment effectiveness but also accessibility to large groups of people. In addition to problems of inelastic demand confronting income constraints and capacity constraints, the rising price for any type of therapy combined with scarcity of effective treatments leads to problems of profiteering and attracts products of uncertain quality. During the period of the outbreak, as information gaps increase and, with them, irrational and even desperate individual responses, pharmaceutical companies gain the ability to charge high prices for virtually any purported treatment, regardless of its safety and efficacy profile, and with minimal risk of tort liability further down the road. While emergency conditions also include downward pressures on prices, which arise, among other things, from emergency government responses such as compulsory licensing, in the US these pressures are curbed by the dominant political belief in the power of the market and the importance of rewarding private innovation. With the ability to raise prices in a time of crisis, and with limited threat of competition due to limited capacity, market incentives might even encourage non-preparedness, untimely response, and profiteering.